TaxTMI 
TaxTMI 
TaxTMI 
2016 (7) TMI 1240
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....the scrutiny assessment, the AO made disallowance of Rs. 1,52,36,988/- u/s. 40(a)(ia) of the Income-tax Act, 1961 (in short 'Act'). 3. The assessee debited interest of Rs. 1,52,36,988/- being the interest paid on time deposits. The AO disallowed the said amount on the ground that such payment is liable to tax deduction u/s. 194A, as no TDS was deducted, in accordance with the provisions of section 40(a)(ia) the interest debited was disallowed. AO also observed that the assessee claimed exemption from TDS u/s. 194A(3)(v). However, this provision is general in nature. There are specific provisions 194A(3)(i) and 194A(3)(viia) which clearly specify that TDS is deductible on interest paid by a cooperative bank. 4. Aggrieved with the a....
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.... above discussion, the interest payments made below Rs. 10,000, the TDS provisions are not applicable. The interest payments made to member shareholders are exempt u/s. 194A(3)(viia). With reference to interest payment to non- members they are again not liable to TDS as the amount was already paid during the FY and the same was not payable as on 31.03.2012 in accordance with decision of Hon'ble Special Bench Vizag in the case of Merilyn Shipping & Transporters of 136 ITD 23 and also in accordance with Hon'ble AP High Court in the case of Janapriya Engineers Syndicate (pronounced on 24.06.2004). Since the entire amount of interest was paid and nothing was payable as on 31.03.2012 the provisions of TDS are not applicable therefore n....
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....t the provisions are applicable in respect of payments made during the year without TDS being made. 4. The ld. CIT (A) erred in relying upon the decision of Hon'ble ITAT, Special Bench, Visakhapatnam, in the case of Merylin Shipping & Transporting not considering the Circular of CBDT No. 10/DV/2013, [F.No. 279/Misc./M-61/2012-ITJ dated 16/12/2013. 5. The ld. CIT (A) erred in relying upon the decision of Hon'ble ITAT, Special Bench, Visakhapatnam, in the case of Merylin Shipping & Transporting, not considering the fact that said decision is placed under Interim Suspension by Hon'ble High Court of Judicature at Hyderabad for the State of Telangana and State of A.P. 6. Any other ground(s) that may be urged at the time of hear....
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....an Rs. 10,000 to individual members/shareholders, assessee represented before CIT (A) that it is exempt u/s. 194A, whereas the section defines as below:- "1. 194A(3)(v) To such income credited or [paid by a cooperative society (other than a cooperative bank) to a member thereof or to such income credited or paid by a cooperative society] to any other cooperative society. 2. 194A(3)(viia), To such income credited or paid in respect of (a) deposits with a primary agricultural credit society or a primary credit society or a cooperative land mortgage bank or a cooperative land development bank. (b) deposits (other than time deposits made on or after the 1st day of July, 1995) with a cooperative society, other than a cooperative soci....
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....remit this matter also to the file of the AO to verify the Form 15G and grant exemption. We direct assessee to file the relevant Form 15G before the AO in support of its case. 12. As regards the alternative submissions of the assessee i.e. payment having been already made, there is no outstanding balance as on 31/03/2012 so as to attract TDS provisions and, hence, the assessee cannot be said to be in default, so as to disallow the payment u/s. 40(a)(ia) of the Act. However, it deserves to be noticed that the Hon'ble Jurisdictional High Court had an occasion to consider the same issue (in the case of CIT v. Janapriya Engineers Syndicate order dated 24/06/2014) wherein the Court held that despite the decision of the special bench decisio....